The EUR/USD currency pair (euro versus the US dollar) is on track to engulf early January (2025) lows from US$1.0224 and test levels not seen since 2022.

Price has exhibited an unmistakable downtrend since September 2024, establishing a series of lower lows and lower highs. Interestingly, traders have noticeably shorted rallies and used the space between the Ichimoku Conversion Line (blue at US$1.0341) and the Base Line (red at US$1.0427) as an area to work with.

Sellers’ Market

With the Ichimoku Cloud also trading to the downside – made up of the Leading Span A (light green at US$1.0384) and the Leading Span B (light orange at US$1.0581) – the 200-day simple moving average (currently trading at US$1.0792) rotating lower, and the current downtrend, this remains a sellers’ market for the time being.

Price Direction?

Despite the bearish signals, investors are unlikely to be tempted to short from current levels because of the recent reaction from the underside of the Conversion/Base Line resistance zone and how close the pair is to the January lows. Therefore, until another test of the aforementioned resistance zone plays out or price engulfs neighbouring lows, sellers are likely to sit on their hands for now.

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